Gold rebound slightly as the sentiment improved in Europe
The metal declined sharply yesterday in line with our expectations where all investors tend to close their positions on gold in order to cover there losses across the board as pessimism dominated the market and led the U.S. dollar to benefit the most against other currencies and commodities.
The metal gained 1.0% today after starting the session in Asia at $1677.38 per ounce, to record the highest at $1692.45. The metal reached a low of $1670.07 so far and is trading in the moment at $1689.50 per ounce
However, gold retuned to gain some strength today as the sentiment improved slightly after European leaders started to pressure Greek political leaders to end the political conflict and provide a written acceptance of the second bailout deal as soon as possible, where European lawmakers aim to provide Greece with the next tranche of 2010's bailout package.
Markets rebounded slightly today after European lawmakers have finally recognized that the time has come for them to implement the measures and quell jitters and rising debt concerns, where Lucas Papademos, the New Greek Prime Minister, in a meeting with the President of the European Commission yesterday called on Antonis Samaras, one of the unity government leaders, to stop playing political games and provide his written acceptance for the second bailout deal.
Moreover, the sentiment improved a bit more after rating agencies affirmed the U.S. credit rating and explained that a failure to apply new budget cuts will not affect the credit rating of the nation as a previously set $1.2 trillion cuts will be activated automatically.
Gold is expected to fluctuate heavily today, however could end the session with gains as European leaders attempt to overcome all the differences and act in unity to tackle the debt crisis, especially when the effects of the crisis started to appear in terms of rising yields and political instability along with the previously seen slowing growth and faltering recovery, where now all nations in Europe are trying to avoid falling into another deep recession.
The world's largest economy will release the gross domestic product figures for the third quarter in a second reading, where the figures are expected unrevised at 2.5% and is expected to have a slight effect on the market; however, an unexpected change in the reading could affect the market either positively if the figures were better than expectations or negatively in case the reading came below expectations.
The U.S. dollar lost strength today, which eased some of the downside pressures forced on the metal, where gold became less attractive after national institutions raised margins requirements on gold futures and now the U.S. dollar movements could be significantly traced to the metal itself, where the U.S. dollar and gold are considered safe havens; however, by time gold became less attractive and the low yielding currency became more preferable, which led investors instead of holding more gold as a safe haven, to liquidate their gold positions to cover their losses.
Among other precious metals, silver gained 0.22% today after starting the session at $31.62 per ounce, where the metal recorded a high of $31.76 and a low of $31.18, and is hovering now around $31.69 per ounce.
Platinum also gained 0.84% today, or $13.00 per ounce, where after opening the session at $1549.00, the metal recorded the highest at $1563.00 and the lowest at $1543.50, and is trading now around $1562.25 per ounce.